Apple Conspired To Set E-Book Prices, Judge Rules

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Apple Inc. “conspired to raise the retail price of e-books,” a federal judge ruled Wednesday as a civil lawsuit brought by the Justice Department reached its conclusion.

As Bloomberg News reminds its readers, “the U.S. sued Apple and five publishers in April 2012, claiming the maker of the iPad pushed publishers to sign agreements letting it sell digital copies of their books under what’s known as the agency model. Under that model, publishers, and not retailers, set prices for each book, with Apple getting 30 percent.”

“In her ruling U.S. District Judge Denise Cote said Apple knew that no publisher could risk acting alone to try to eliminate Amazon.com’s $9.99 price for the most popular e-books so it ‘created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their e-books.’ “

Cote also wrote that “the evidence is overwhelming that Apple knew of the unlawful aims of the conspiracy and joined the conspiracy with the specific intent to help it succeed.”

During the trial, Apple attorney Orin Snyder said the judge would set a “dangerous precedent” if she concluded that Apple manipulated e-book prices.

The Wall Street Journalcalls Wednesday’s ruling “a stern rebuke” for Apple. It notes that the five publishers Apple was accused of colluding with “have all since entered into settlements with the Justice Department, as well as in a separate lawsuit by a group of state attorneys general. But Apple refused to settle and decided to go to trial.”

Apple, the Journal adds, “argued at trial that it engaged in hard-fought negotiations with the publishers and denied that it engaged in any collusion.”

“This result is a victory for millions of consumers who choose to read books electronically,” Assistant Attorney Gen. Bill Baer writes in a statement e-mailed to reporters. “After carefully weighing the evidence, the court agreed with the Justice Department and 33 state attorneys general that executives at the highest levels of Apple orchestrated a conspiracy with five major publishers — Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster — to raise e-book prices. Through today’s court decision and previous settlements with five major publishers, consumers are again benefiting from retail price competition and paying less for their e-books.”

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